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When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Nahar Capital and Financial Services Ltd. (NSE:NAHARCAP) stock is up an impressive 111% over the last five years. It’s also up 20% in about a month.
Check out our latest analysis for Nahar Capital and Financial Services
While Nahar Capital and Financial Services made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, companies that are not judged on their (small) profits should be growing revenue quickly. That’s because it’s hard for shareholders to have confidence a company will grow profits significantly if it isn’t growing revenue.
For the last half decade, Nahar Capital and Financial Services can boast revenue growth at a rate of 8.2% per year. That’s a pretty good long term growth rate. We’d argue this growth has been reflected in the share price which has climbed at a rate of 16% per year over in that time. Given that the business has made good progress on the top line, it would be worth taking a look at the growth trend. When a growth trend accelerates, be it in revenue or earnings, it can indicate an inflection point for the business, which is can often be an opportunity for investors.
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Nahar Capital and Financial Services the TSR over the last 5 years was 130%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While the broader market gained around 2.2% in the last year, Nahar Capital and Financial Services shareholders lost 30% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 18%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. You could get a better understanding of Nahar Capital and Financial Services’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.